Monetary Management in Latin America

With growing world economic interdependence, there has been a distinct loss in the autonomy of domestic monetary management, at least in the developing countries, and especially in Latin America. In addition, the degree of instability prevailing since the 1970s in financial flows, world commodity prices and trade policies has made the task of regulating the money supply more difficult. The external debt service burden, moreover, has distorted the domestic economies and the local financial and monetary systems to a point at which it constitutes an overriding factor that jeopardises positive monetary management. These three sets of factors external to the scope of the domestic economies are now conditioning to a larger extent than before the ability of central banks and national treasuries to carry out appropriate monetary management policies with some degree of success.